We often talk about the idea of saving for a rainy day – the thinking being that if your boiler packs up or your roof springs a leak, you have money set aside to deal with the problem. While this type of saving is a very good thing, it’s also quite a negative way of looking at putting money away. So how about framing it more positively – why not save for a sunny day too?
You might wish to take the concept of sunny days literally and save for a beach holiday or summer music festival. Or it might be a special treat – something you’ve always longed for, similar to the way children save up their pocket money. Either way, the sense of excitement and anticipation you can feel when saving for these experiences can brighten your days in the present. It can give you something to look forward to – you have a sense of purpose and of working towards a goal. And when you finally indulge, it feels like something earned.
But it isn’t just short-term happiness. Research (pdf) carried out by the University of Bristol as part of UK Savings Week, shows that savers are likely to have higher levels of life satisfaction. The study tracked people’s saving habits over six “waves”, covering a 10-year period. Someone who saved regularly in all six waves was two-thirds more likely to have high life satisfaction than a non-saver, regardless of income. But even a person who saved in only one of the waves was 34% more likely to have high life satisfaction than a non-saver.
Coventry Building Society’s senior savings proposition manager, Jonathan Wilson, says: “Saving can give you the confidence that, if something goes wrong, it will be OK.”
It’s the opposite of being kept awake at night by money worries. He adds that this security can extend to others you care about. “Recently, I’ve supported a family member with some unexpected bills. Knowing that I could rely on my savings to cover the costs without any worry allowed me to focus on what really mattered.”
But many people don’t save. According to research published this year, more than 11 million Britons don’t have “rainy day” savings of at least £1,000. This is for all the reasons you’d expect. On the one hand, we have a cost of living crisis and stagnant wages. And on the other, we live in a media-saturated consumer society where we are constantly being exhorted to spend more by everyone from influencers to supermarkets.
But a big part of not saving is that we don’t know where to start, or we believe that the amount we can save will be insignificant. The good news here is that you don’t need to save very much to enjoy the benefits, both financial and psychological. Just putting aside a little each month really helps.
In order to motivate yourself, Wilson says you might begin by seeing your savings as a way to earn money. “Recently, I’ve been thinking about saving as a way to generate passive income; so how much in savings it could take to earn 1p, 10p or £1 a day from the interest.” He adds that you might also focus on other measurable metrics, “such as building up a pot which could cover an extra month of bills, or simply a target figure”.
You can also help build good habits by allocating money for savings before you can spend it. This could mean setting up an automated transfer such as a standing order to transfer funds the day you get paid, so the temptation to spend is taken away from you. Products such as Coventry Building Society’s Regular Saver can help you do this.
Regular saving can seem daunting at first, especially for those on modest incomes. Wilson says that this is where you need to strike a balance. Try to save too much and the sacrifice might mean that the habit doesn’t stick. But while you should reward yourself occasionally, saving can also make you think about your spending. “It’s surprising how often we buy things ‘in the moment’ that we don’t really need. If I’m feeling drawn to purchase something, I try to ask myself whether I need it or simply want it. That can help me to put the brakes on my spending.”
Saving also builds resilience in several ways. First, by removing the need to borrow – especially using high-cost credit – and second, by preventing hardship. The University of Bristol research found that 12% of those who hadn’t saved in the past 10 years were behind with their bills in 2021-22, but this fell to just 2% among those who managed to save every other year. In the medium term, by saving, you may even be able to treat yourself more.
The research also showed that longer life goals tend to be achieved by savers. More than three-quarters (82%) of those who regularly saved in five or six of the survey waves had become homeowners after 10 years, compared with just 15% of those who never regularly saved. Home-ownership, surely, is one of the best sunny days you can save for.
Of course, even if you have great financial habits, dipping into your savings can still sometimes be tempting. The trick here, says Wilson, is to mentally ring-fence different pots of money. “I’m clear on what my savings are for and have different accounts for different needs – I have specific money set aside for treating myself.”
Whether you’re saving for a rainy day or a sunny day, with Coventry Building Society, you can do both
